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DOL Fiduciary News: May 31, 2016

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In Fiduciary Land, Which Products Can Thrive?

From the June 2016 issue of Research Magazine

The dust is still settling from the recent Department of Labor fiduciary rules and most people I talk with don't know quite what to make of it. Of course, that hasn't put a damper on their willingness to express strong opinions — both pro and con.

Some have criticized the DOL for being overly accommodating to the industry. Others call it a government takeover of investment advice. A recent editorial in The Wall Street Journal predicted that retirees would all be forced to buy Treasuries.

The DOL Rule(s): The 2016 Broker-Dealer Presidents Poll

From the June 2016 issue of Investment Advisor Magazine

Independent broker-dealers have successfully dealt with many business and regulatory challenges over the years, but as we sit at mid-year 2016, the latest regulatory challenge is its biggest business challenge. That's not our editorial judgment — it's how the leaders of 58 independent broker-dealers feel.

This is the sixth year that we’ve surveyed the presidents of independent BDs on their biggest challenges and opportunities in the same month we gather data from IBDs (data from 67 broker-dealers was received, including poll responses from 58 BD presidents) on the state of their businesses. This year, we added three questions about the DOL's redefinition of fiduciary under ERISA, and the BD presidents’ responses were illuminating (the poll was sent, and the great majority of those 58 responded, before the DOL rule was released on April 6).

Charting the New Fiduciary Landscape

From the June 2016 issue of Research Magazine

So be it: The Department of Labor released its fiduciary rule on April 6, 2016, and closed the supposed retirement-advice loophole. But in mandating what it deemed that the Employee Retirement Income Security Act of 1974 (ERISA) lacked, the DOL imposed a whole new layer of regulation and surveillance on the financial services industry.

The immediate task is for firms and advisors to untangle knotty questions raised in the rule, which holds FAs to a fiduciary standard of care when giving clients advice on 401(k) plans and IRAs, among other retirement accounts.

Two sides of the DOL fiduciary rule's 'Best Interest Contract Exemption' advisers must understand

InvestmentNews; May 27, 2016 @ 1:12 pm

The Best Interest Contract Exemption is one of the main pillars of the Labor Department's fiduciary rule.

Without it, many brokers and advisers wouldn't be able to continue doing business in retirement accounts under current business practices and compensation arrangements. But with it, there is a way forward (albeit with more compliance requirements and litigation risk).

However, there is a sort of duality to the exemption that will dictate how firms can forge ahead: what has become known generally in the industry as BICE versus “BICE Lite,” each with its own specific requirements and trade-offs.

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